Christie Property Tax Cap Would Add to Town Budget Writing Challenges

Gov. Chris Christie's proposed 2.5-percent property tax cap would add to the challenges in crafting future town budgets, according to members of the Town Council.

While not taking a specific position on the proposal, Councilman Mark Ciarrocca, the finance committee chairman, said passage of the governor's proposed amendment would present another challenge to the town in future budget years. Christie formally released the proposal, which he first discussed during his March 16 budget address earlier this week. The proposal is part of the governor's local government finance reform package.

"I think a 2.5-percent hard cap would be a significant challenge," Ciarrocca said. "If we had it this year we would have cut more."

Ciarrocca said future budget years have become tough to plan due to declining non-tax revenue in the budget. This includes revenue from construction fees and other permits. Construction fees have been one of the hardest hit revenue lines in the budget, given the near halting of the local construction industry following the real estate downturn. Ciarrocca said the town has also seen a decrease in parking revenue.

He said in past years, finance committees have been able to project out the budget more in advance in order to craft fiscal plans year to year. He said the international economic crisis has made this virtually impossible.

"Every year we will have to grind out budgets until the economy changes substantially and until we have the ability to generate substantially more revenue," he said.

Councilman Dave Haas, the finance committee vice chairman and the Council's sole Democrat, noted that the town now sees two thirds of the annual revenue come from property taxes versus just above 50-percent when he first joined the Council in 2003. He said this will make it tougher for future Council's to craft budgets and a 2.5-percent property tax cap would further tie the hands of town government going forward.

Ciarrocca said that he wants to know all of the specifics of the governor's plan before he makes a final comment on the plan. He noted that he would not be surprised if the plan does change before final passage. Under state law, a constitutional amendment has to pass with a super majority in each house of the legislature before a statewide referendum is held to consider the amendment. The eariliest the amendment could go to voters is November of this year.

"I'm not sure what it is going to look like," he said.

Ciarrocca did stress that the town is prepared to handle whatever comes of Christie's proposal and will continue to monitor state affairs in crafting fiscal policy.

"Our history has been is that whenever we have been dealt a hand by Trenton, we will respond to it," Ciarrocca said.